By Matthew Spieler
While sales of laminate products did not necessarily keep the registers ringing this year, especially since July, they did light up the dollar sign more times than the other categories did on a percentage basis.

With eight weeks still to go in the year, it is clear the category will not come near the growth levels it hit in recent years, when increases were in the mid to high teens. Nonetheless, the sector should still register a healthy high single-digit growth, according to FCNews research.

From 2003 to 2004, sales grew at a brisk 19.6% and topped the $1 billion level for the first time since the product came to the U.S. in 1993. Last year, despite a large amount of low-end, low-quality imports flooding the market and record-high fuel and energy prices, laminate sales still grew at an impressive 15.2%. For 2006, it appears sales will grow on average 9.3%, with total volume closing in on $1.4 billion.

“Laminate flooring continues to gain favor with U.S. consumers as an attractive, durable, practical and easily installed flooring option,” said David Wilkerson, vice president of marketing for Shaw’s Hard Surfaces Division. “However, the market is increasingly competitive at the wholesale and retail levels. This is due to the influx of foreign imports in conjunction with the growing number of overseas manufacturers that have opened production facilities in the U.S. in the past 12 to 18 months.”

David Small, marketing director for Pergo, said, “Overall, laminate flooring sales remained strong during 2006—for both Pergo and the entire laminate industry.” But he did note “retail sales have softened during the fall; however, we continue to anticipate total... sales to be up—both in terms of dollars and square feet—versus last year.”

Asian factor

When it comes to the amount of low-end goods coming into the U.S., Small said lower-priced imports from Asia continue to flood the category, but there hasn’t been any major fluctuations in the situation since 2005.

Paul DeCock, North American president of Unilin, maker of Quick•Step, said most of the growth has come at the high end of the market. “There continues to be pressure from the low-end goods coming over from Asia. Right now there are basically two strategies: Either make a lot of cheap stuff that you have to sell by the truckloads, or create differentiated products that have value-added features. At the same time, we also need to get the consumer to move up the value curve.”
He noted consumers are still not that knowledgeable about the product, especially the newer goods which not only mimic wood and tile better than ever, many of the performance issues have been conquered.

De Cock’s assessment of the consumer’s knowledge appears correct based on a study being conducted by the North American Laminate Flooring Association (NALFA). Bill Dearing, the association’s president, noted, “We’re doing a study right now that addresses some of these questions. I can say that consumers are expecting better performance and styling.” NALFA’s membership is made up of both manufacturers of laminate flooring and material suppliers within the category. It estimates the organization’s manufacturing members account for between 80% and 85% of all laminate sales in North America.

Small agrees, saying, “Consumer demand for varied looks that push the design envelope has truly peaked this year and we feel they will continue to expect greater decor options. Laminate performance will continue to improve with products that feature incredible durability and greater scratch protection. New products will offer joint technologies that make laminate installation easier and faster than ever before.”

Shaw’s Wilkerson added, “A big percentage of our growth during the course of the year has been fueled by our new beveled-edge introductions.”

Like most executives, he noted even though the lower-end products represent the market’s largest segment, “We continue to develop and place emphasis on middle and higher-end goods which require styling variations the consumer can distinguish and appreciate. Designs that utilize premium, exotic species are also gaining market momentum.”

More variety

De Cock said new products will feature more variety in sizes to better mimic the real thing. Plus, the clarity of the image will continue to improve as high definition photography advances. “The wave of innovation will deal with the surface of the product—from printing and even better precision in embossing to gloss levels and overall better aesthetics.”

Small concurred with De Cock on where the laminate category is headed in terms of its next wave of product innovations. “Varied plank widths and length—as seen in Pergo’s Select Traditional Strip collection—will be more prominent, as will embossed in-registered decors that feature increasingly realistic textures. “Specifically decors that go beyond the standard oaks, pines and maples to include rich cherries and mahoganies and whitewashed looks, as well as replications of exotic materials like bamboo, koa, jatoba and merbau such as those featured in our World Traveler collection will be more prominent.

“We continue to focus on building added value into our products,” Small continued, “and our branding initiatives in order to let our specialty retailers know that we are not only the original laminate manufacturer, but that we also are working hard to stay at the front of the pack by constantly developing and introducing new manufacturing technologies and ultra-realistic designs that aren’t being offered by any of our competitors.”

When it comes to the import situation, Wilkerson pointed out, “a growing number of U.S retailers seem to be unhappy with the quality and overall service.” As with the other companies surveyed by FCNews, he said Shaw has dealt with these challenges “by providing an extremely diverse product range that features superior quality, premiere service, exceptional styling and proven value.”

De Cock said products continued to be offered throughout the price spectrum—from $.79 a square foot to $4 a square foot—but price points are not the only way for the category to be considered. Rather, the focus is on whether the product is a commodity or one that is differentiated and has added-value features to the consumer.

“We look at this as an opportunity,” he said, “because our strategy is to develop better products for the consumer with features she wants and needs to have a beautiful, long-lasting floor.”

Commercial moving along

While the residential side of the business continues to account for the lion’s share of laminate sales—somewhere between 92% and 95% of all sales—there is activity in the commercial arena as a number of mills such as Alloc and Wilsonart continue to make a serious commitment to the segment.

Earlier this year, Wilsonart began answering the trend of having more residential styled products in commercial settings in order to make for a more homey environment. The manufacturer launched five handscraped and six distressed designs as part of an expansion to its commercial offerings.

At the time, Randy Phillips, national sales manager for Wilsonart Commercial, said the mill was the first manufacturer to launch a line of commercial grade artisan laminate flooring for corporate, healthcare, hospitality, retail, education and multi-family housing markets.

Several of the designs come in the company’s dual-plank widths, meaning the product is available in both a five-inch narrow plank or a 7-3/4-inch wide full board. “The dual plank widths enable designers to achieve dramatic improvements in color variation within the floor by varying plank widths,” he said.

Products such as these, Phillips explained, will help the laminate category gain more acceptance among architects, designers and specifiers. “The interest is particularly pronounced in retail and hospitality sectors where designers are interested in creating unique and dramatic handmade artisan effects with products that are rich in character and will stand up to the wear and tear of commercial environments.”

Positive outlook

Despite the increase in competition from both imports and the number of companies opening manufacturing facilities in the U.S., combined with the slowing economy, officials are still bullish when it comes to the laminate flooring sector.

“Overall,” concluded Small, “the laminate category continues to experience strong consumer demand and provides outstanding opportunities for retailers and manufacturers to increase their overall sales and profits. Manufacturers like Pergo that continue to offer superior value-added programs to consumers and the trade will maintain their success.”

De Cock is hopeful the best is still to come, noting right now this is the “silence before the storm. But, will the storm ever happen? It’s kind of quiet right now—the volcano still needs to erupt in America.”

He pointed to Europeans and how they have wood and laminate in places were other flooring products traditionally go, such as the bedroom. “Right now in the U.S., it is all carpet. Will Americans ever get to there?”